Nottinghamshire County Council Pension Fund has awarded Kames Capital a £300 million buy and hold fixed income mandate.
The mandate will be invested in a portfolio of corporate bonds with the aim of providing cash flow, which will then be used to meet the council's commitments to infrastructure over the next five years.
All local government pension funds are expected to increase their allocation to infrastructure over the coming years, after the chancellor George Osbourne announced in 2015 that the assets of the 89 local government funds in England and Wales were to be pooled into six new British Wealth Funds.
The £4bn Nottinghamshire scheme aims to invest in primarily investment grade bonds with a yield of Libor plus 1.25% after fees.
Keith Palframan, group manager of finance at the Fund, said: "We have made a commitment to infrastructure and plan to make staged investments from March 2018 to the end of 2021."
"Kames Capital has created a customised corporate bond portfolio to meet our objectives for liquidity, security, and performance over this period."
The new mandate builds on Nottinghamshire's existing broad fixed income mandate with Kames.
The fund currently has just £50m, or 1.3%, of assets in infrastructure as of 31 March 2016, and £440m in UK fixed interest, according to its annual report for 2015-2016.
Peter Ball, Kames Capital's director of institutional business, said: "At a time of great change for all local government pension schemes we are delighted to have worked closely with Nottinghamshire County Council to develop a solution which supports the pension fund's long-term programme of infrastructure investment."
Last year Nottingham invested in a closed-ended property fund run, by Kames Capital, joining pension funds for Leicestershire County Council and West Midlands.
All three schemes have also joined the Central Pool alongside six other Midlands-based local government funds, with around £34bn in assets under management.
First published 09.02.2017